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Collaborative Consumtion – Sharing Economies – What’s the big deal?

September 24, 2015

The phrase, “There’s an app for that”, has never been more true than in today’s market .  This is not surprising given the adoption rate of mobile devices and the fact that mobile exceeds PC internet usage(1) and drives nearly half of e-commerce traffic (2).  But did you know that there’s an app to find someone who will come clean out your garage (Task Rabbit) , do your laundry (Washio) or shop and deliver your groceries (Instacart)?  This emerging trend is not because these companies have created an awesome app or have a great understanding of technology.  No, it is because they had an idea, saw there was a specific need that could be filled in a better way than the current market offering, and most importantly, they excel at providing the consumer with a great streamlined customer experience and that in turn translates into customer happiness and loyalty.  When customers are happy, they also tend to share their experiences with others and this then leads to more customers.

This “new phenomenon” is referred to as Collaborative Consumption, Sharing Economies, or Collaborative Economies.  It’s not just a new way of buying and selling, it’s actually a departure back to the way things were done in the past – people are gettiing goods and services from other people who have the skills or time to do something you can’t or don’t prefer to do rather than going through a middle man (or company).  The difference is the technologies of the collaborative economy makes finding these other people possible.

People have shifted from merely “consumers” and are now acting as lenders, producers, sellers, etc.  This has opened up a myriad of opportunity.  Now a family traveling to a resort for vacation doesn’t have to book 2 or 3 rooms at the resort hotel for $300 per room per night, they can rent someone’s home for $300 for the entire weekend.  Instead of having to ask your parents (again) if you can borrow money, you can now take out a loan from strangers and not have to pay 100% interest (or more).  And the list goes on…

The difference from the past is that instead of having one handymen in your community who can fix your roof, there are many, many more people offering these services and accessible using the apps to help you find them.  But how do you know that the goods or services you are getting are of good quality?  Opponents would argue that because there is no regulation to these collaborative economies, the quality of service can’t be known.  However, these goods and services are being judged by previous users “rating” their experience.  Success in this collaborative economy is all about convenience and customer service.

So how can business compete in this new emerging market?  One of the advantages that established companies have over a new start up is that if they have a trusted brand that consumers are likely to continue to use as long as the companies are able to provide these products and services in a way that is as convenient, cost effective, and provides a comparable customer experience as their collaborative economy counterpart.  If business embrace the model of on-demand sharing and collaboration, they can build on the consumer loyalty they have worked so hard to gain.  However, as this new collaborative economy trend continues to grow, established companies have a short time frame to modify their business model to provide this ease of access and excellent customer experience to ensure they have won the loyalty of their customers.  Otherwise, they will be left behind.

For more information on how you can streamline your business, contact us at Status Not Quo.

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